Chris McLaughlin

Market News & Commentary by Chris McLaughlin, October 6, 2008
http://www.shortsalesriches.com/welcome.html

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WEBINAR REMINDER:

Join us Tuesday at 9 PM EST, 6 PM PST for our fr'ee Webinar that will reveal the Top 12 Strategies on Getting Rich with Short Sales by clicking here:

https://www2.gotomeeting.com/register/967993793

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Panic. Mania. Free Fall. Think of a lot of really bad adjectives and just put them next to the word "stock market" and you pretty much have summed up how bad it was today after lunchtime. The market plunged over 800 points, touching a level of 9,497.72, a level not seen since October 23, 2003. But bargain hunters jumped in at the last minute, with the Dow ending the day down 369.88 to 9,955.50. Fears of global recession sent oil below $90 a barrel, and while the stock market was "only down 369" at the end of the day, investors fear that more carnage may be ahead.

In a real sign of that potential carnage, a CNN/Opinion Research Cop. poll showed that almost 60% of Americans believed that a depression, with 25% unemployment and extensive bank failures, was at least "somewhat likely."

In real estate related news, the Federal Reserve said that it would lend up to $900 billion in cash to help break the credit crunch adversely affecting banks and consumers. The Fed said its 84-day and 28-day loans that are made to banks will increase by $150 billion each, which adds to the $600 billion already available. "Together these actions should encourage term lending across a range of financial markets in a manner that eases pressures and promotes the ability of firms and households to obtain credit," the Fed said.

Now, onto our real estate investor education section...

Bonus Depreciation: More Reason than Ever to Buy Short Sales in 2008

Searching for even more reasons to start buying short sales sooner rather than later? Today we will take a few minutes to add to the previously mentioned items on why short sales make more sense now than ever before: Bonus Depreciation for 2008. If eligible, the additional depreciation allows you to take an additional 50 percent depreciation of the qualifying property in the first year - a hefty write-off to be sure!

As part of the stimulus package approved by congress earlier this year, many short sale investors may be eligible for a small windfall in the form of bonus depreciation. The 2008 bonus depreciation covers more than real estate; depending upon qualifying criteria, it may cover tools, software, leaseholds and a host of other potential assets related to your short sale investments. To qualify, the property must conform to one of the following:

•· Eligible for the MACRS (Modified Accelerated Cost Recovery System) with a depreciation period of 20 years or less.

•· Tangible property including equipment, a qualified leasehold property, water utility property, non-proprietary software program.

•· Acquired in 2008 via a binding contract or manufacture, construction or production started during 2008. The contract and work must be dated after January 1, 2008 to qualify.

A few important facts to keep in mind...

•1. Bonus depreciation for 2008 can be combined with Sec 179 expensing for even greater savings!

•2. The depreciation bonus is due to expire at the end of 2008 for equipment, software and other purchases with a depreciation schedule less than ten years but has now been extended until the end of 2009 for items (like real estate) with depreciation schedules greater than 20 years.

•3. Bonus depreciation is discretionary - you are not required to claim it. If you are concerned over large tax bills in the future then it may be better to take the tax hit today and leave additional depreciation available in the future. Remember, depreciation must be recaptured when you sell a property - it is separate from Capital Gains taxes.

•4. Bonus depreciation is allowed for those filing AMT or regular taxes.

Ok, enough about depreciation, I know it isn't your most exciting topic, but you need to see all the opportunities out there! I held a conference call today with realtors and investors focused on short sales and continued my drum beat: some of us will come out of this turmoil making more money than ever before. I don't know about you, but I plan on being on the winning side of the equation. Henry David Thoreau said "Most men lead lives of quiet desperation and go to the grave with the song still in them." That group of men has a lot of people that joined it today. I refuse to be a participant.

I know it is tough out there. Your 401(k) stinks, your home equity seems non-existent, and your income compared to last year is way off. So you can join the group of quiet desperation, and you can get all depressed about how things are. Or you can say, you know what, this is what separates the leaders from the pretenders. This is what will set up my business for the next decade. This is the moment. This is the time. Now go seize it!

More on Tuesday ...

Chris McLaughlin, J.D., M.B.A.
web: http://www.shortsalesriches.com/welcome.html
e-mail: info@shortsalesriches.com

Phone: (800) 452-7627

P.S.:

Want to know how you can pull in six figures a month doing short sales on autopilot? Nathan is on track for another $100k month... Join us for our fr'ee Webinar that will reveal the Top 12 Strategies on Getting Rich with Short Sales:

https://www2.gotomeeting.com/register/967993793

P.P.S.: If you want to have a great laugh, check out this latest YouTube video about Nathan's autopilot system where he doesn't talk to banks, doesn't talk to sellers, and doesn't talk to buyer. What does he do? Click here to find out:

http://www.youtube.com/watch?v=QsOLmgTY--U

and if you like what you see in the video, then go here and take action:

http://www.shortsalesriches.com/welcome.html

Warren Buffett Says This Is Economic "Pear Harbor"

Market News & Commentary by Chris McLaughlin, October 2, 2008
http://www.shortsalesriches.com/welcome.html

The Dow Jones Industrial continued to slide again today, down 344 points, despite progress on the bailout in Congress. The U.S. Senate voted 74-25 last night to approve a more palatable bailout plan that was presented to voters. Both Senators Obama and McCain voted in favor of the bill. Chief among the new provisions will be increasing FDIC insurance to $250,000 from $100,000. The bill prevents the FDIC from charging its member banks more in order to cover the increase as well and enables the FDIC to borrow directly from the Treasury should it need additional capital.

But investors were rattled by comments made by legendary investor Warren Buffett. Buffett said the economy is suffering from the same thing that brought the United States into War World II back on December 7, 1941. "This really is an economic Pearl Harbor," Buffett said. "That sounds melodramatic, but I've never used that phrase before. And this really is one.... In my adult lifetime, I don't think I've ever seen people as fearful economically as they are now," the Oracle of Omaha commented.

Now on to our real estate market commentary...

The savvy short sale investor knows that information is the cornerstone to finding the best deals so here is a new twist on an old method of finding potential properties. Traditionally, locating short sale opportunities centered on locating distressed home owners but with the economic crisis in full swing, stalking sick banks is increasingly becoming a viable option. In fact, an entire range of corporations, investment funds, trusts and other entities increasingly need to liquidate positions to raise capital and/or remove non-performing "assets" from their balance sheets.

One little known source that is a veritable gold mine for sick bank stalkers is the Federal Deposit Insurance Corporation or FDIC. Yes, the illustrious name behind the scenes is increasingly going public with their warnings, enforcement actions and other administrative admonishments leveled against institutions, corporations and even individuals.

To get in on the action, contact the FDIC's Public Information Center by calling 877.275.3342 to request a copy of the "Enforcement Action Report." Generally published monthly, it may take time to sort through the mundane admonishments to find the valuable nuggets of real information.

The FDIC also publishes an ongoing list, as well as email notification, of failed banks free for the taking. Simply visit http://www.fdic.gov/bank/individual/failed/banklist.html and sign up.

Finally, the last great FDIC resource that every short sale investor will want to bookmark is the contact information for obtaining a "Release of Lien" for a failed bank, Savings and Loan or other financial entity. As you know, obtaining a release of lien is required when selling but for those homeowners involved with a failed financial institution or one that is a subsidiary of a failed bank, the process isn't always so straightforward.

To find out if the bank or financial institution failed or is a subsidiary of a failed bank, call the DRR Customer Service Center at 888.206.4662.

To request a Release of Lien for a property that was originally financed with a now defunct lender, put the request in writing and send to FDIC, 1601 Bryan Street, Dallas TX 75201 Attention: DRR Customer Service Center/Bryan or e-mail your request to: cservicefdicdal@fdic.gov OR it can be faxed to 703-812-1082 along with a $50 fee. You may also use www.pay.gov to expedite payment and processing.

More tomorrow...

Chris McLaughlin, J.D., M.B.A.
web: http://www.shortsalesriches.com/welcome.html
e-mail: info@shortsalesriches.com

Phone: (800) 452-7627

P.S.:

So we're going to do it again tonight (Thursday) at 7PM EST, 4 PM PST. I received lots of e-mails from the East Coast begging for an earlier time, so here you have it! We're hosting a Webinar (you need a computer and a phone to participate). So if you're interested in learning how to make money in this market jump on this now and register for f.ree while we still have openings:

https://www2.gotomeeting.com/register/779139540

P.P.S.: If you want to have a great laugh, check out this latest YouTube video about Nathan's autopilot system where he doesn't talk to banks, doesn't talk to sellers, and doesn't talk to buyer. What does he do? Click here to find out:

http://www.youtube.com/watch?v=QsOLmgTY--U

and if you like what you see in the video, then go here and take action:

http://www.shortsalesriches.com/welcome.html

Market News & Commentary by Chris McLaughlin, October 1, 2008
http://www.shortsalesriches.com/welcome.html

The Dow Jones Industrial average traded sideways today, ending the day down 19.59 on the day. The U.S. Senate prepared to vote on a bailout plan tonight as vote getters added on lots of popular provisions to lure new supporters to the package. Chief among the new provisions will increasing FDIC insurance to $250,000 from $100,000; the bill prevents the FDIC from charging its member banks more in order to cover the increase as well and enables the FDIC to borrow directly from the Treasury should it need additoinal capital.

The Oracle of Omaha, Warren Buffett, went on a buying spree again today, buying $3 billion in General Electric with a buy price of $22.25 along with a 10% dividend. The goodwill the Buffett brings will enable General Eletric to sell $12 billion of stock. Buffett said, "GE is the symbol of American business to the world...I am confident that GE will continue to be successful in the years to come."

Car makers plunged today, as tight credit and gas prices are keeping customers away from showhomes. Ford Motor's sales plunged 34 percent, and Toyota, the manufacturer of the popular fuel efficient Prius Hybrid, still had sales tank 32%.

Now, on to real estate and investor education ...

When it comes time to present an offer on a short sale, learn to recognize these unhealthy home traps then either walk away or use this "Housing Hit List" to further (and often dramatically) reduce the price of the home. Remember, once identified, even "as-is" homes must disclose known defects so taking the time to perform a few inexpensive tests can result in saving thousands or even tens of thousands of dollars from already reduced market rates.

The Unhealthy Home Hit List...

•1. Lead. Prior to 1978, most homes used lead based paint. Since lead is known to cause mental retardation and health issues among children, it is federal law that all rental units notify potential occupants of the possible existence of lead in homes built prior to 1978. De-leading can be done but may be expensive especially if the home also used lead pipes. Other potential sources of lead contamination include the soil surrounding the home. If in doubt - test paint, water and soil samples for lead.

•2. Radon. This colorless, odorless gas is frequently found in some areas of the country especially in newer homes that tend to be tightly sealed and "weatherized". Purchase an inexpensive radon test kit to find out if a potential property is impacted.

•3. Mold/Mildew. Insurance companies hate it, consumers fear it and most savvy investors realize how easy it can be to remedy. Prior water damage from flooding, roof damage, pipe problems or other humidity control issues can lead to the presence of mold and mildew.

•4. Air Quality. The Environmental Protection Agency has recently released studies indicating the air quality in some homes to be worse than the smog of Los Angeles...quite a feat if you think about it especially when you realize the worst culprits are not toxic waste dumps or super fund sites but rather indoor pollutants. In most cases things like air deodorizers, cleaning agents, carpeting and other common materials contribute to degraded air quality issues. Test the air then search for the source. In most situations, air vents, enzymatic treatment and other simple solutions fix the problem.

•5. Water Quality. Although not always as simple to fix as air quality, water quality issues aren't always a deal breaker; iron, sulfur and calcium build-up might be unsightly but presents little real health risk. Homes with private water sources are particularly susceptible - and can often be corrected with the addition of a professional filtration system.

•6. Asbestos. Used in everything from roofing tiles to fireproof surrounds, asbestos was a favored building material for years. Unfortunately, it is also a known carcinogen that requires specialized handling and disposal.

•7. Meth and Other Drug Lab's. From flop houses to full blown meth labs, sooner or later most short sale investors will come across a foreclosed home contaminated by drugs. It is important to understand the local, state and federal guidelines required to properly recondition the home prior to making a bid.

More tomorrow...

Chris McLaughlin, J.D., M.B.A.
web: http://www.shortsalesriches.com/welcome.html
e-mail: info@shortsalesriches.com
Phone: (800) 452-7627

P.S.:

So we're going to do it again this Thursday at 7PM ET. I received lots of e-mails from the East Coast begging for an earlier time, so here you have it! We're hosting a Webinar (you need a computer and a phone to participate). Last night's webinar was nearly sold out, so if you're interested in learning how to make money in this market jump on this now and register while we still have openings:

https://www2.gotomeeting.com/register/779139540

P.P.S.: If you want to have a great laugh, check out this latest YouTube video about some hate mail that Nathan and I received! Here's the link to our YouTube site:

http://www.youtube.com/shortsalesriches

and if you like what you see in the video, then go here and take action:

http://www.shortsalesriches.com/welcome.html

Market News & Commentary by Chris McLaughlin, September 29, 2008
http://www.shortsalesriches.com/welcome.html

Financial and credit markets are in crisis. Congress failed to pass the Administration's bailout today. Fear, panic, and calamity overcame investors as many threw in the towel after the US House of Representatives gave a stunning rebuke to the Bush Administration as well as Congressional leadership. The Dow Jones Industrial Average plunged 777.68, nearly 7%, and the S&P 500 dropped 8.79%.

Investors were wondering what bank was going to be next after Citigroup announced that it would scoop up Wachovia for just $1 a share (Wachovia shares plunged over 81% today). But Citigroup is not necessarily getting the bank for cheap-it must write down much of Wachovia's $312 billion loan portfolio.

So let's take a deep breath. All within a month Fannie Mae, Freddie Mac and AIG are owned by the government. Washington Mutual is gone, bought on the cheap by JP Morgan. Lehman Brothers is history. Bear Stearns was already history. Wachovia's shareholders have been wiped out and are now Citigroup shareholders for pennies on the dollar. Brand names that Americans recognize are gone. All within a month. Wow.

What's next? You can see that regional banks are under intense pressure. Banks like Fifth Third dropped ‘43% today, First Federal Financial dropped 25% and KeyCorp plunged 33%. "Who's next?" is now the topic of conversation across the nation.

If you're trying to get a sense about the level of anxiety about economic activity, just look at energy prices. Crude oil dropped $10 a barrel today as many believe that with the slowing economy so too will there be less gasoline and oil used. Crude oil has dropped over 20% in just the past two weeks.

Now, on to our Realtor and investor education section...

Now that the stock market is in utter chaos, typically investors look again to "hard assets" like gold and housing to invest in. Many of you reading this are either investors or realtors ... so let's take the approach of understanding how to best advise clients to get into real estate versus gold.

On September 17^th, gold recorded the largest ever advance as it soared $120 within a 24-hour period. Just a few months ago, gold reached a record-breaking $1,000 plus per ounce for a short period of time. Considered by many to be "Gods Money," gold has enjoyed a long and illustrious career as a "hedge" during periods of rapidly escalating inflation or other economic uncertainty but does it deserve the reputation? Should you run to liquidate holdings and buy gold bullion? Most of all...how does it compare to real estate when the going gets tough?

To answer these - and maybe a few other burning questions - today we will spend a little time discussing real estate and gold as a hedge during uncertain economic times. Every portfolio has room for both but use these facts when deciding what percentages to allocate to each:

Fact #1: Real Estate as an Index. The Gold Standard is long gone. Whatever your opinion of removing the dollar from the gold standard, the fact is the dollar is a fiat currency without a gold backing. That has been - and remains - the current state of affairs. The fiat - or paper currency - has not been backed by gold for decades and despite the occasional lone voice crying in the wilderness, little serious attention has been given to restoring the currency to a gold-backed standard. During a period of time when many doom-and-gloom types are calling for a complete collapse of the dollar, savvy real estate investors may well turn to the Weimar Republic as a working example of what happens after a currency collapses: Germany turned to real estate (rather than gold) holdings as the foundational index for the newly created currency!

Fact #2: Shelter is a Primal Need. As any student of psychology or human behavior knows, during times of uncertainty, people tend to seek out the most basic needs of food, clothing and shelter. Although gold is an item of intrinsic value, it does not compare to that of shelter. The worse the economy - the more people return to the values of home and hearth. In fact, much of the value of gold is due to its ability to be used as a unit of exchange for food, clothing and shelter during times of need. On the other hand, if you own real estate - ie, shelter, land able to grow food, water and other essentials then you have the most sought after commodity of all.

Fact #3: Gold can - and has - dropped significantly in the past. Like all recent investments, gold has seen highs and lows. Real estate has experienced 20 percent drops in price but so has gold. Looking back at the late 70's and early 80's, gold momentarily reached a high of $845 per oz only to steadily decline for the next 20 years when it finally bottomed out at approximately $250 per oz...NOT adjusted for inflation! On the other hand, while real estate also experienced a sharp price increase during the late 70's and early 80's it then remained stagnant for approximately a decade - barely keeping pace with inflation (but still managing to hang on). Those who held gold rather than real estate - lost.

Remember, those who don't learn from history are doomed to repeat it. Learn the lesson from Weimar Germany, the United States in the late 70's and early 80's and even man himself...men steal gold but go to war for land.

So let's get this straight. Mom and Pop don't have much money anymore, but what little money they do have is now losing money and now banks aren't safe. Credit has tightened beyond all recognition and the thought of getting a loan that isn't government backed is laughable.

But it is the single biggest gift many of us will ever be given in our lifetime! Wherever the public runs one way, I say run the other. And I have made a lot of money because of it. It is time to buy foreclosures and start understanding how short sales can build major wealth. It is time to get excited about being a Realtor or real estate investor again!

So we're going to do it again tomorrow night (Tuesday). We're hosting a Webinar (you need a computer and a phone to participate). Last week's webinar was nearly sold out, so if you're interested in learning how to make money in this market jump on this now and register while we still have openings:

https://www2.gotomeeting.com/register/759612505

The webinar will be both Nathan and I discussing how you can turn this crazy market into the biggest opportunity in a lifetime. It begins at 9 PM ET (6 PM PST) so that our friends on the West Coast can join us, too. Sorry if you're East Coast you might have to stay up a little late but the fr.ee content is well worth it!

So remember ... in this market, you can now buy low, and not only sell high, but sell fast. And that means less risk, less holding costs, and money in the bank. But you have to do more than read this and agree ... you need to take action, too.

See you at the top!

Chris McLaughlin, J.D., M.B.A.
web: http://www.shortsalesriches.com/welcome.html
e-mail: info@shortsalesriches.com

P.S.: If you want to have a great laugh, check out this latest YouTube video about some hate mail that Nathan and I received! Here's the link:

http://www.youtube.com/watch?v=AHWX_2oXdm8

and if you like what you see in the video, then go here and take action:

http://www.shortsalesriches.com/welcome.html

Market News & Commentary by Chris McLaughlin, September 25, 2008

http://www.shortsalesriches.com/welcome.html

All eyes were on Washington, D.C., today as President Bush urged lawmakers to come together in a bipartisan manner to back the Administration's $700 billion Mortgage Bailout Plan. Bush met with lawmakers and invited both Presidential contenders Barrack Obama and John McCain to the White House for a full briefing.

Investors were pleased with the progress, sending the Dow Jones Industrial Average up 197, or 1.8%. But after the market closed, Senator Richard Shelby, a Republican from Alabama and Chairman of the Senate Banking Committee, emerged from the White House and said that there was no bailout agreement reached during the meeting. He then proceeded to strongly speak out against it. So hold on to your hats -- tomorrow's market may send a different signal if the plan is in trouble.

In real estate news, new home sales continued their downward slide. A government report shows that new homes sales were at their lowest point in 17 years, at a seasonally adjusted annual rate of 460,000, which was down from 520,000 in July. Only 39,000 new homes were sold in July, the lowest since December of 1991. The report also noted that median new home prices continued to slide, down 5.5% to $221,900, from $234,900 in July.

In a positive sign, inventory continued to shrink to 405,000, a level not seen since August of 2004. This drop in inventory is a positive sign for most Realtors and investors, as there will be fewer brand new homes selling at fire-sale prices from developers unable to make their interest payments.

Now on to our Realtor and investor tips, tricks, and traps for Realtors and investors...

Short Sales and Valuation Models

When it comes time to prepare a short sale offer, many novice investors or buyers are uncertain how to demonstrate a proper valuation model. Chances are your bank will prefer one method, the property tax office another and (of course) you will want to use the model which most benefits your position.

Take time to run various scenarios before making your final offer or when presenting your financial portfolio for review. Depending upon the situation, the numbers can present a dramatically different picture.

Here are a few alternative valuation models to consider:

Replacement Cost. This works very well when adding an older property or a major "fixer" to your portfolio. For example; an average price of a 1,000 square foot home in the late 70's or early 80's was often only $40 per square foot or $40,000. Today, the starting price to replace the same home would be at least $100 per square foot or $100,000. To calculate the replacement costs, you can use insurance industry averages or calculate the current cost to rebuild the property on the same lot including impact fees, labor, supplies, taxes etc...

Tax Assessed Values. This can work for or against you so be cautious. Properties that were recently sold at higher prices may have inflated tax assessed values which can make them appear more valuable than the current market price. On the other hand, when purchasing a short sale or foreclosure for resale, a high tax assessed value may make your asking price seem very competitive.

Comp Values. Most real estate agents use comparable sales data to determine home prices. Comp values are simply the average sales prices of similar sized homes within the same general area.

Income Potential. Another alternative valuation model is to determine the income potential of the property; essentially, what would the property rent for if placed on the market? If the rental rate plus anticipated vacancies, repairs, maintenance plus PITI would cover the mortgage then it is considered a strong "buy" opportunity.

Return on Investment or ROI. Another common method typically used by commercial investors is to calculate the return on investment or ROI. Using a simple example, if the total out of pocket cash expenditure was $20,000 and you made $2,000 then the ROI would be 10 percent - a rate considerably above the stock market this year!

Whatever valuation model you select, remember to maximize the numbers when showing banks or financial institutions your numbers and minimize when negotiating the purchase price of a property.

More tomorrow...

See you at the top!

Chris McLaughlin, J.D., M.B.A.
web: http://www.shortsalesriches.com/welcome.html
e-mail: info@shortsalesriches.com

P.S.: Did you hear about our amazing Webinar that we're doing tonight at 9 PM ET (6PM PST)? It is f.ree of charge to you! Nathan Jurewicz and I will be live on the web explaining the Top 5 Traps to Short Sales Investing, and we'll have some new information that you won't want to miss out on. We only have room for 7 more seats, so if you're interested please go now to:
https://www2.gotomeeting.com/register/798484502

P.P.S.: Have you thought about building an investor-focused short sales business? There's never been a better time. Go now to http://www.shortsalesriches.com/html and take action today!